IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-30694
ERNESTO FRANCISCO,
Plaintiff-Appellant,
versus
STOLT ACHIEVEMENT MT, a vessel bearing
official number 1973; STOLT ACHIEVEMENT,
INC.; STOLT-NIELSEN TRANSPORTATION
GROUP, LTD.; STOLT PARCEL TANKERS, INC.,
the operator and/or owner of the M/T Stolt
Achievement,
Defendants-Appellees.
Appeal from the United States District Court for
the Eastern District of Louisiana
_______________________________________________________
June 4, 2002
Before KING, Chief Judge, REAVLEY and WIENER, Circuit Judges.
REAVLEY, Circuit Judge:
In this appeal we conclude that the district court properly ordered the case to
arbitration and accordingly affirm.
BACKGROUND
Appellant Ernesto Francisco, a Philippine national, was injured on a chemical
tanker ship located on the Mississippi River. Francisco was employed aboard the M/T
Stolt Achievement (the vessel), which was allegedly operated by Stolt-Nielsen
Transportation Group, Inc., (Stolt) a Liberian corporation.
Stolt’s “Crewing Manager” submitted an affidavit attesting that when Stolt hires
Philippine seamen, it must comply with employment contract requirements of the
Philippine Overseas Employment Administration. Francisco signed such a contract. The
contract contains lengthy provisions addressing employee compensation and benefits in
the event of work-related injury, illness, or death. It provides in section 29 of the
“Standard Terms and Conditions” that in the event of “claims and disputes arising from
this employment,” the parties agree to arbitrate their disputes in the Philippines.1 Section
31 of the same document provides that “[a]ny unresolved dispute, claim or grievance
1
Section 29 states: “In cases of claims and disputes arising from this
employment, the parties covered by a collective bargaining agreement shall submit the
claim or dispute to the original and exclusive jurisdiction of the voluntary arbitrator or
panel of arbitrators. If the parties are not covered by a collective bargaining agreement,
the parties may at their option submit the claim or dispute to either the original and
exclusive jurisdiction of the [Philippine] National Labor Relations Commission (NLRC),
pursuant to Republic Act (RA) 8042 otherwise known as the Migrant Workers and
Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the
voluntary arbitrator or panel of arbitrators.” Section 10 of the Migrant Workers and
Overseas Filipinos Act of 1995 provides that disputes submitted to the NLRC are
resolved by arbitration. Hence, our reading of the contract is that all claims and disputes
arising from the employment are subject to arbitration, regardless of whether there is a
collective bargaining agreement and regardless of whether the parties opt to proceed
before the NLRC.
2
arising out of or in connection with this Contract . . . shall be governed by the laws of the
Republic of the Philippines, international conventions, treaties and covenants where the
Philippines is a signatory.”
Francisco sued Stolt in Louisiana state court, asserting claims under the Jones Act2
and under general maritime law for unseaworthiness and for maintenance and cure. He
alleged that suit in state court was authorized by the saving to suitors clause of 28 U.S.C.
§ 1333(1).
Stolt removed the case to federal district court, alleging that Francisco had signed
an employment contract agreeing to arbitrate claims against Stolt in the Philippines, and
that this agreement was subject to the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (the Convention),3 a convention to which the United States and
the Philippines are both signatories. The United States implemented the Convention in
1970 through the enactment of 9 U.S.C. §§ 201-208 (hereinafter the Convention Act).
Francisco filed a motion to remand the case to state court, and Stolt filed a motion
to compel arbitration under 9 U.S.C. § 206. The district court denied the motion to
remand, granted the motion to compel arbitration, and dismissed the suit. This appeal by
Francisco followed.
DISCUSSION
2
46 U.S.C. app. § 688.
3
Done June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38,
reprinted in 9 U.S.C.A. § 201 note.
3
Generally, the removal jurisdiction of the federal district courts extends to cases
over which they have original jurisdiction.4 “Any civil action of which the district courts
have original jurisdiction founded on a claim or right arising under the Constitution,
treaties or laws of the United States shall be removable without regard to the citizenship
or residence of the parties.”5 Under § 203 of the Convention Act,6 “[a]n action or
proceeding falling under the Convention shall be deemed to arise under the laws and
treaties of the United States.” Notwithstanding the saving to suitors clause,7 under § 205
of the Convention Act,8
[w]here the subject matter of an action or proceeding pending in a State
court relates to an arbitration agreement or award falling under the
Convention, the defendant or the defendants may, at any time before the
trial thereof, remove such action or proceeding to the district court of the
United States for the district and division embracing the place where the
action or proceeding is pending.
The district court, therefore, had removal jurisdiction and subject matter jurisdiction if the
pending dispute was one “falling under” the Convention.
4
28 U.S.C. § 1441(a).
5
28 U.S.C. § 1441(b).
6
9 U.S.C. § 203.
7
28 U.S.C. § 1333 provides that the federal district courts have exclusive
jurisdiction of “[a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in
all cases all other remedies to which they are otherwise entitled.”
8
9 U.S.C. § 205.
4
The district court concluded that it should compel arbitration because this case fell
under the arbitration provision of the employment contract, as well as the provisions of
the Convention Act and the Convention. Francisco essentially makes three arguments as
to why the district court erred. He argues first that his case does not fall under the
Convention Act because there is an exception making that Act inapplicable to seaman
employment contracts. He argues second that, under the Convention itself, his case is not
“capable of settlement by arbitration” and otherwise does not fall under the Convention.
He argues third that his claims are not subject to the arbitration agreement.
A. The Convention Act (9 U.S.C. §§ 201-208)
The Convention Act provides that “[a] court having jurisdiction under this chapter
may direct that arbitration be held in accordance with the agreement at any place therein
provided for, whether that place is within or without the United States.”9 In applying the
Convention, we have held that it “contemplates a very limited inquiry by courts when
considering a motion to compel arbitration,” and that the court should compel arbitration
if (1) there is an agreement in writing to arbitrate the dispute, (2) the agreement provides
for arbitration in the territory of a Convention signatory, (3) the agreement arises out of a
commercial legal relationship, and (4) a party to the agreement is not an American
9
9 U.S.C. § 206.
5
citizen.10 “If these requirements are met, the Convention requires district courts to order
arbitration.”11
These elements were met in the pending case. Francisco, a Philippine national,
signed a written employment contract stating that claims and disputes arising from his
employment, including personal injury claims, were subject to arbitration in the
Philippines. The employment contract states that it shall be governed by the law of the
Philippines and such conventions and treaties to which the Philippines is a signatory.
The Philippines and the United States are both signatories to the Convention.12
Title 9 of the United States Code has two chapters relevant to this appeal. Chapter
1 contains the Federal Arbitration Act (Arbitration Act). Chapter 2 is the Convention
Act. Francisco argues that under § 1 of the Arbitration Act,13 seaman employment
contracts are excluded from the reach of the Convention Act. He argues that this
exclusion applies to the Convention Act because, under § 208 of the Convention Act,14
the Arbitration Act “applies to actions and proceedings brought under [the Convention
10
Sedco, Inc. v. Petroleos Mexicanos Mexican Nat’l Oil Co., 767 F.2d 1140,
1144-45 (5th Cir. 1985).
11
Id. at 1145.
12
9 U.S.C. § 201 note (see notes following text of Convention indicating
signatories).
13
9 U.S.C. § 1.
14
9 U.S.C. § 208.
6
Act] to the extent that [the Arbitration Act] is not in conflict with [the Convention Act] or
the Convention as ratified by the United States.”
Francisco correctly points out that the Arbitration Act does not cover seaman
employment contracts. Section 2 of the Arbitration Act 15 generally recognizes the
validity of arbitration provisions “in any maritime transaction or a contract evidencing a
transaction involving commerce.” However, § 1 of the Arbitration Act 16 expressly
excludes “contracts of employment of seamen” from the reach of the Arbitration Act.
This exclusion of seamen employment contracts in the Arbitration Act, however,
conflicts with the Convention Act and “with the Convention as ratified by the United
States” under § 208 of the Convention Act, and therefore is not applicable to the
15
9 U.S.C. § 2.
16
Section 1 of the Arbitration Act, 9 U.S.C. § 1, states in its entirety:
§ 1. “Maritime transactions” and “commerce” defined; exceptions to
operation of title
“Maritime transactions”, as herein defined, means charter parties, bills of lading of
water carriers, agreements relating to wharfage, supplies furnished vessels or
repairs to vessels, collisions, or any other matters in foreign commerce which, if
the subject of controversy, would be embraced within admiralty jurisdiction;
“commerce”, as herein defined, means commerce among the several States or with
foreign nations, or in any Territory of the United States or in the District of
Columbia, or between any such Territory and another, or between any such
Territory and any State or foreign nation, or between the District of Columbia and
any State or Territory or foreign nation, but nothing herein contained shall apply to
contracts of employment of seamen, railroad employees, or any other class of
workers engaged in foreign or interstate commerce.
7
Convention Act. Article II(1) of the Convention itself is very broadly worded to provide
that signing nations shall recognize arbitration agreements “in respect of a defined legal
relationship, whether contractual or not, concerning a subject matter capable of settlement
by arbitration.” The United States, in ratifying the Convention, agreed to apply it “only
to differences arising out of legal relationships, whether contractual or not, which are
considered as commercial under the national law of the United States.”17 Neither the
Convention nor the limiting language ratifying the Convention contemplate any exception
for seamen employment contracts or employment contracts in general. While the
ratification language expresses an intent to limit the reach of the Convention to
commercial relationships, there is no indication that employment contracts or seamen
employment contracts are not considered “commercial.”
In keeping with the ratification language, § 202 of the Convention Act states:
An arbitration agreement or arbitral award arising out of a legal relationship,
whether contractual or not, which is considered as commercial, including a
transaction, contract, or agreement described in section 2 of this title, falls under
the Convention. An agreement or award arising out of such a relationship which is
entirely between citizens of the United States shall be deemed not to fall under the
Convention unless that relationship involves property located abroad, envisages
performance or enforcement abroad, or has some other reasonable relation with
one or more foreign states. For the purpose of this section a corporation is a
citizen of the United States if it is incorporated or has its principal place of
business in the United States.
17
9 U.S.C.A. § 201 note (see footnote 29 to notes following text of Convention).
This limiting language was authorized by Article I(3) of the Convention, which provides
that a signatory “may declare that it will apply the Convention only to differences arising
out of legal relationships, whether contractual or not, which are considered as commercial
under the national law of the State making such declaration.”
8
Again, nothing in this language suggests an exception for seaman employment contracts.
While the Arbitration Act contains such an exception, the language from § 202 of the
Convention Act states only that the legal relationships covered by the Convention Act
include those transactions covered by § 2 of the Arbitration Act. The Convention Act
does not state that agreements falling under the Convention are exclusively limited to
those which also fall under § 2 of the Arbitration Act, and makes no mention of the
exclusion for seaman employment contracts found in § 1 of the Arbitration Act.
In short, the language of the Convention, the ratifying language, and the
Convention Act implementing the Convention do not recognize an exception for seamen
employment contracts. On the contrary, they recognize that the only limitation on the
type of legal relationship falling under the Convention is that it must be considered
“commercial,” and we conclude that an employment contract is “commercial.” Even if
we were doubtful of the correctness of our conclusion, doubts as to whether a contract
falls under the Convention Act should be resolved in favor of arbitration, in light of the
Supreme Court’s recognition generally of “the strong federal policy in favor of enforcing
arbitration agreements,”18 and its recognition that
[t]he goal of the Convention, and the principal purpose underlying
American adoption and implementation of it, was to encourage the
recognition and enforcement of commercial arbitration agreements in
international contracts and to unify the standards by which agreements to
18
Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 217 (1985).
9
arbitrate are observed and arbitral awards are enforced in the signatory
countries.19
The Court has also recognized that the federal policy favoring arbitration “applies with
special force in the field of international commerce.”20
Francisco argues that as a matter of policy the Convention Act and the Arbitration
Act should be applied uniformly. We cannot accept this argument. If the language of a
statutory provision “is sufficiently clear in its context and not at odds with the legislative
history, it is unnecessary to examine the additional considerations of policy . . . that may
have influenced the lawmakers in their formulation of the statute.”21
We note two other arguments which favor Francisco’s position but do not
ultimately alter our conclusion. Francisco argues that the exclusions of § 1 of the
Arbitration Act are referred to in the statutory heading of § 1 as “exceptions to operation
of title.”22 Title 9 of the United States Code includes the Arbitration Act in Chapter 1 and
the Convention Act in Chapter 2. The use of the term “title” in the heading to § 1
therefore suggests that its exclusion of seaman employment contracts applies to both
Acts.
19
Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974).
20
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631
(1985).
21
Aaron v. SEC, 446 U.S. 680, 695 (1980) (internal quotations omitted).
22
See n. 16, supra (giving full heading and text to 9 U.S.C. § 1).
10
While the use of the term “title” in the heading is helpful to Francisco, it does not
change our conclusion that the plain language of the Convention Act, enacted long after §
1 of the Arbitration Act,23 does not admit to an exception for seaman employment
contracts. “While words in the title of a statute or the heading of a section can shed light
on the meaning of an ambiguous word or phrase in the text of a statute, they cannot create
an ambiguity where none otherwise would exist.”24
Francisco also points to legislative history which is helpful to him. In a Senate
hearing on February 9, 1970, Richard Kearney, the chairman of a State Department
advisory committee, gave the following testimony:
[P]aragraph 3 of article I of the Convention permits a state party to the
Convention to file a declaration that the Convention will apply only to legal
relationships that are considered as commercial under the national law of
that state. . . . [T]he United States will file such a declaration . . . .
Consequently it is necessary to include the substance of this limiting
declaration in the legislation that implements the Convention. This is what
the first sentence of section 202 intends. It was not, of course, necessary to
make any reference to the national law of the United States in the first
sentence of section 202 because the definition of commerce contained in
section 1 of the original Arbitration Act is the national law definition for the
purposes of the declaration. A specific reference, however, is made in
23
Section 1 of the Arbitration Act was part of the 1947 reenactment and
codification of the Federal Arbitration Act, which comprised the entirety of Title 9 when
reenacted. See 61 Stat. 669, 674 (1947). The Convention Act, Pub. L. No. 91-368, 84
Stat. 692 (1970), was enacted in 1970.
24
Natural Res. Def. Council v. EPA, 915 F.2d 1314, 1321 (5th Cir. 1990).
11
section 202 to section 2 of title 9, which is the basic provision of the
original Arbitration Act.25
This testimony suggests that the definition of a transaction involving “commerce”
in §§ 1 and 2 of the Arbitration Act is the same as the definition of a “legal relationship . .
. which is considered as commercial” falling under the Convention Act. However, the
witness does not specifically address whether the exclusion in § 1 of seaman employment
contracts is also applicable to the then-proposed § 202 of the Convention Act.
Furthermore, the testimony of a witness not a member of Congress cannot bind
this court where the plain language of the Convention Act does not provide an exception
for seaman employment contracts. “Legislative history is problematic even when the
attempt is to draw inferences from the intent of duly appointed committees of the
Congress.”26 As discussed above, § 202 of the Convention Act states that a contract
considered commercial includes those contracts described in § 2 of the Arbitration Act,
makes no mention of § 1, and does not state that only those contracts described in § 2 of
the Arbitration Act “fall under” the Convention. “Courts should not rely on inconclusive
statutory history as a basis for refusing to give effect to the plain language of an Act of
Congress . . . .”27
B. The Convention Itself
25
S. Rep. No. 91-702, at 6 (1970).
26
Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 120 (2001).
27
Hubbard v. United States, 514 U.S. 695, 708 (1995).
12
Francisco argues that, aside from the issue of the scope of the Convention Act, the
Convention itself is inapplicable to his suit. He bases this argument on his claim that on
September 11, 2000, the Supreme Court of the Philippines suspended section 20(G) of
the standard terms and conditions of his employment contract. We assume without
deciding that Francisco is correct regarding the suspension of section 20(G) by the
Philippine court and the applicability of this change to his case.
Section 20 of the terms and conditions addresses compensation and benefits due
the seaman for injury or illness. Section 20(G) provides:
The seafarer . . . acknowledges that payment for injury, illness, incapacity,
disability or death of the seafarer under this contract shall cover all claims
arising from or in relation with or in the course of the seafarer’s
employment, including but not limited to damages arising from the contract,
tort, fault, or negligence under the laws of the Philippines or any other
country.
Francisco argues that under the terms of the Convention the suspension of section
20(G) means that the Convention no longer governs his claims against Stolt. We cannot
agree with this argument. The suspension of section 20(G) only means that the seaman
no longer acknowledges that the receipt of scheduled payments set out in the contract are
the only benefits he can recover from his employer.
Francisco argues that under Article II(1) of the Convention, the treaty only applies
to “differences . . . in respect of a defined legal relationship . . . concerning a subject
matter capable of settlement by arbitration.” Francisco similarly relies on Article V(2)(a)
of the Convention, which states that recognition and enforcement of an arbitral award
13
may be refused if “[t]he subject matter of the difference is not capable of settlement by
arbitration under the law of” the country where enforcement is sought. The suspension of
section 20(G) does not, in our view, render the dispute incapable of settlement by
arbitration under these provisions. Even if section 20(G) is rendered a nullity, the parties
still agree to arbitrate their dispute under section 29 of the terms and conditions of the
contract, discussed above; section 20(G) only limits the claims available to Francisco. If
anything, the suspension would seem to give the arbitrators greater discretion to grant the
relief to which Francisco thinks he is entitled. We note that in an arbitration before the
Philippine National Labor Relations Commission (NLRC), Section 10 of the Migrant
Workers and Overseas Filipino Act of 1995, included in the record, does not appear to
limit awards to those damages set out in the employment contract. Instead, it provides
that in cases before the NLRC labor arbitrators “shall have the original and exclusive
jurisdiction to hear and decide . . . the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages.”
Francisco also relies on Articles V(1)(c) and (e) of the Convention. Article V(1)
provides that recognition and enforcement of an arbitral award may be refused “at the
request of the party against whom it is invoked,” if, under subpart (c), “[t]he award deals
with a difference not contemplated by or not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond the scope of the submission to
arbitration . . . .” First, Article V(1) by its terms can only be invoked by a party resisting
14
an award. No award has been made and Francisco would have no reason of which we are
aware to resist the enforcement of an arbitration award made to him under the
employment contract. Second, the mere suspension of a contract term stating that the
remedies enumerated in the contract are exclusive would not, in our view, make an
arbitration in the Philippines one dealing with a dispute “not contemplated by and not
falling within the terms of the submission to arbitration” under Article V(1)(c) and would
not render an arbitration decision one “on matters beyond the scope of the submission to
arbitration” under that provision.
Article V(1)(e) provides that recognition and enforcement of an award may be
refused if “[t]he award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law of which,
that award was made.” Again, this provision only comes into play after an award has
been made, and only at the request of the party resisting enforcement of the award, and is
inapplicable here. Further, the mere fact that one clause of the employment contract
purporting to limit the relief available to Francisco can no longer be enforced in the
Philippines does not mean that a Philippine authority has “set aside” an award under
subpart (e). If anything, the suspension of section 20(G) of the contract means that
Francisco is eligible for greater relief from the Philippine arbitrators than before the
suspension of that section’s limitation on the employee’s remedies.
C. The Employment Contract
15
Francisco separately argues that his claims against Stolt are federal and general
maritime tort claims that are not covered by the arbitration provision of the employment
contract. The contract clearly provides remedies for work-related personal injuries, and
states in paragraph 29 that “claims and disputes arising from this employment” are
subject to arbitration in the Philippines. The arbitration provision is not by its language
limited to contract claims but covers all claims “arising from this employment.”
Francisco alleged in his original petition that his injuries were sustained “in the course
and scope of his employment.” In Marinechance Shipping, Ltd. v. Sebastian,28 we
addressed whether a forum selection clause in a seaman employment contract applied to
tort claims. We held that the clause—providing that “any and all disputes or
controversies arising out of or by virtue of this Contract” shall be litigated in the
Philippines—applied to tort claims brought by two Philippine seamen injured aboard a
vessel while it was located in the Mississippi River.29 We do not agree that the language
of the forum selection clause in Marinechance is meaningfully different from the
language of the arbitration clause in the pending case for purposes of deciding whether
tort claims are covered, and note that “foreign arbitration clauses are but a subset of
foreign forum selection clauses in general.”30
28
143 F.3d 216 (5th Cir. 1998).
29
Id. at 223.
30
Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 534
(1995).
16
Francisco also contended at oral argument that an employee like himself who was
not subject to a collective bargaining agreement (CBA) is not required to submit his claim
to arbitration in the Philippines. Assuming that this argument was timely made, we reject
it. Paragraph 29 of the Terms and Conditions states that parties subject to a CBA shall
submit the claim or dispute to arbitration, but that parties not subject to a CBA may
submit the claim or dispute “to either the original and exclusive jurisdiction of the”
NLRC “or to the original and exclusive jurisdiction of the voluntary arbitrator or panel or
arbitrators.” As explained above in our footnote 1, cases submitted to the NLRC are
resolved by arbitration. Accordingly, even though the contract uses the word “may”
when describing the procedures available to an employee not covered by a CBA, the only
two options available to such an employee both require arbitration. Especially in light of
our general rule, recognized in a Convention Act case, that “whenever the scope of an
arbitration clause is in question, the court should construe the clause in favor of
arbitration,”31 we read the contract as mandating arbitration of this dispute in the
Philippines.
AFFIRMED.
31
Sedco, 767 F.2d at 1145.
17
Francisco v. Stolt Achievement MT
Court: Court of Appeals for the Fifth Circuit
Date filed: 2002-06-04
Citations: 293 F.3d 270
Copy CitationsCombined Opinion